Are Investors Undervaluing BJ's Wholesale Club (BJ) Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is BJ's Wholesale Club (BJ). BJ is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

We also note that BJ holds a PEG ratio of 1.20. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BJ's PEG compares to its industry's average PEG of 1.33. Over the last 12 months, BJ's PEG has been as high as 1.91 and as low as 1.02, with a median of 1.35.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BJ has a P/S ratio of 0.35. This compares to its industry's average P/S of 0.68.

These are only a few of the key metrics included in BJ's Wholesale Club's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, BJ looks like an impressive value stock at the moment.

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